Going hammer and tongs

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Some of Australia's top companies are flogging their art collections. But anyone doubting the return on a boardroom Boyd should note the bids, writes Peter Fish.

At Coles Myer, they're going back to basics. The 500 or so artworks that once graced the black glass-clad headquarters in Melbourne's Tooronga, many of them in the walnut-panelled executive floor, are heading off to be hammered by auctioneers Christie's later this year - an event that one corporate art adviser describes as a tragedy.

As part of a progressive refurbishment at Coles that's also described as a cultural shift, the vibrant canvases of Australian artists such as Arthur Boyd, Fred Williams and John Perceval, which once took pride of place in senior executive offices, are being turfed out. Now, all executives and staff - from chief executive John Fletcher down - are getting what Scott Whiffen, general manager for corporate affairs, says are "similar facilities", right down to the desks and chairs. Presumably it's also farewell to the executive washroom.

So what is corporate art all about and why have some companies, such as BHP Billiton and WMC Resources, been ditching their art collections in recent years while others, such as Macquarie Bank, continue to see art as an intrinsic part of the company's image? It seems corporate art means different things to different people.

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Some corporates accept that art adds a certain intangible aura. Others say that having money tied up in paintings is hard to justify in today's tough business climate. Or they want a new focus, a change of direction or a different decor - perhaps all three. The one thing that all sides would probably agree on is that art acquired a few decades ago often turns out to be more of an investment than anyone ever thought.

Jettisoning the paintings and prints at Coles Myer is part of a significant cultural change that's occurred since 2001, when Fletcher took over at a head office once nicknamed Battlestar Galactica or the Ritz Carlton - housing in sybaritic splendour past retail chieftains such as the since disgraced Brian Quinn and the ousted Solomon Lew.

Fletcher, on a brief to turn around the underperforming giant, demanded a less formal executive environment which offered no special treatment for the group's top people, putting them on the same level as everyone else in the corporation, which has 165,000 employees spread through 1900 stores.

So what's going to hang on the walls of those identical Tooronga offices? Plain old photographs. Nothing as stimulating as a Max Dupain classic Sunbaker print or an atmospheric nude. Just photos of retail scenes - "our people in stores serving customers; a reflection we are a retail business", Whiffen says.

Sadly, amid all the cultural change, no one seems to have been around long enough to answer questions about when the paintings were bought and why. Probably, as Whiffen says, they came from different sources when GJ Coles married the Myer Emporium in 1985.

Whatever, there's no stigma attached to the paintings themselves, which Christie's paintings director, Jon Dwyer, says were acquired 25 to 30 years ago and should sell for a sturdy profit in today's booming art market - especially with the added prestige of coming from a prominent corporate owner.

The Coles Myer collection is expected to fetch a total of less than $1 million - small beer indeed for a corporation that's just chalked up total sales of $8.6 billion for the year to June, a rise of 28 per cent.

But many of the paintings would have enjoyed strong price appreciation over the period.

Among the costlier pictures from the collection are Arthur Boyd's On the Banks of the Shoalhaven, which is estimated to fetch $80,000 to $120,000, William Delafield Cook's Towards Evening on the Hawkesbury at $50,000 to $70,000 and Fred Williams's Landscape at $28,000 to $35,000.

"Over 25 years, without question, they would have done extremely well, given the current climate in the marketplace," Dwyer says.

Figures compiled by Roger Dedman in the Australian Art Market Movements Handbook show that Arthur Boyd works cost an average of less than $5000 in the early 1980s and soared above $30,000 in 2002. Boyd's output varies widely, with his top pictures worth close to $1 million in today's market. Works by Fred Williams have followed a similar price trend.

The French-owned Christie's, which this week unveiled a big art auction for viewing at its new Edgecliff rooms in Sydney before putting it under the hammer on Monday and Tuesday, has handled a few corporate sell-offs in recent years, including that of BHP Billiton and the continuing dispersal of the huge art and antiques collection formed by the once big-spending Tempo Services founder, John Schaeffer.

Sotheby's, which is also staging a significant art sale in Sydney next week, has handled corporate art clearances, including those of Kerry Stokes/Orica, BP and John Fairfax, publisher of the Herald.

The Coles Myer collection will be offered in Melbourne in November.

How does Dwyer interpret the wave of corporate art sell-offs? "There's probably more focus on what [companies] are doing internally; some don't see art as part of their core business," he says. A lot of corporations sell because of renovations, Dwyer says, with the move towards steel and glass, and minimalist environments. And with buoyant conditions on art markets, there's probably never been a better time to sell.

"Every corporate collection I have valued over the last 25 years would all be way ahead. There's no doubt at all they've been a very good investment," he says.

Yet corporate art is virtually never bought as an investment, it seems, although it usually sits as an asset on the books and often can be sold for more than it cost.

It's worth noting that the ownership costs of art can be substantial. As well as the purchase price, a collection may involve extra bills for specialised curatorial advice as well as insurance and conservation.

With corporate art, adding value for shareholders usually takes a back seat to other, less tangible benefits. Collections of paintings, sculpture and other art items are more commonly used to build company image or identity, to beautify public spaces and boardrooms and impress the public, or simply as a reflection of the personal tastes or artistic foibles of a forceful boss.

An affinity for art gives cultural kudos, at a personal and corporate level, lending an air of aesthetic sensitivity and perhaps an aura of respectability even to those with little claim to such qualities. Who could forget Alan Bond's various purchases - including Van Gogh's Irises, and the painting which saw him jailed for fraud, Manet's Promenade. Supporting art and artists is often seen as a good corporate cause and can reinforce a company's image as a worthy Australian.

Certainly organisations as diverse as Wesfarmers, ANZ Bank, the Reserve Bank of Australia, Allens Arthur Robinson and Macquarie Bank continue to foster art and take a pride in their corporate collections.

Deutsche Bank, on the other hand, is among those contemplating a change in collecting direction. It is facing a move to a stylish new Sydney building next year, the Lord Norman Foster-designed 126 Phillip Street, where there are virtually no walls, only glass. Apart from internal pillars, there's virtually no hanging space for the investment bank's art - which includes a number of canvases by Arthur Boyd as well as works on loan from the German parent bank's vast collection. It is contemplating a shift to contemporary art and installations by young Australians, a spokesperson says, reflecting a revitalised role as a young, innovative investment bank.

Deutsche is yet to draw up a strategy with its designers and architects. If it does sell off its more traditional art, it would realise a nice profit, with most having been bought in the 1980s.

Macquarie Bank and the Reserve Bank of Australia, two organisations at opposite ends of the risk spectrum - provide an interesting contrast in their collecting philosophies.

"It's a tragedy when these things happen," is how Macquarie Bank's Julian Beaumont sums up Coles Myer's decision to sell off its art collection. He puts the sale of the John Fairfax art collection in 2002 in the same bracket.

"The last thing I'd want to do is question corporate motives," he says. "If it's necessary, it's necessary, but it's still a pity - especially if it [the collection] has been built up to be part of the identity of the group."

And that's what Macquarie Bank's collection is all about, he says, to identify with the organisation. It comprises about 400 artworks, including paintings drawings and sculptures, all essentially contemporary Australian landscapes by artists including Tim Maguire, Bill Robinson, Rosalie Gascoigne, Cressida Campbell, Gordon Bennett and Emily Kngwarreye.

It is estimated to be worth in excess of $3 million.

The whole idea of the collection was to reflect the persona of the bank, Beaumont says.

After starting in 1985, Macquarie was a little-known, emerging organisation, "and so we bought lesser-known and emerging artists". Now, like Macquarie Bank itself - whose generous remuneration policies have earned it the sobriquet the millionaires' factory - those little-known artists are rather better known and have appreciated sharply in value.

Works by Bill Robinson and Rosalie Gascoigne, for instance, are worth many multiples of what Macquarie paid for them in 1987 and 1988.

"In essence, the collection was made for the enjoyment of the bank's staff and clients and to reinforce the bank's image," Beaumont says - not just in Australia but overseas. Clients come into Macquarie offices in Tokyo or London and see contemporary arts from Australia, he adds.

"It wasn't originally - and it's still not - there for the purposes of being a good financial asset." The rise in value is a bonus, he says.

Beaumont, a former director of Macquarie Bank, ceased full-time work with the investment bank in 1996, though he consults informally on infrastructure work.

But as chairman of its 12-man art committee, he has been closely involved in its art collections and acquisitions from the start, a role which he still holds.

With a nod to the bank's solid profit orientation, based on funds management and fee-based income from tollways and other infrastructure assets, Beaumont says: "To some people in an organisation, financial imperatives are paramount. They're obviously not far beneath the surface in Macquarie Bank.

"But it may not be as important as building an image, even for those who are purely financially orientated."

As for adding shareholder value, he says: "I believe it does stack up. Anything that reinforces the image of an organisation does add shareholder value ... brand, signature are important.

"It would be a great pity if the powers that be decided to turn it into hard cash."

The Reserve Bank has a substantial art collection of some 40 to 50 works which it has owned for many decades, according to company secretary David Emanuel. It includes such names as Sidney Nolan, Russell Drysdale, Fred Williams and Jeff Smart, some of which were acquired in the 1950s and 1960s. Such artists, now prominent names, were at the time emerging figures on the art scene.

Many works were personally picked by the bank's first governor, H.C. "Nugget" Coombs - a noted economist with a wide interest in the arts, among many other interests.

"It's a good collection - not an outstanding one," Emanuel says, "and we haven't added to it over a very long period."

The paintings and sculpture are on the executive floor, in the boardroom and board reception areas as well as in public areas, Emanuel says. "So while we have art in our executive and public areas, we regard it as an obligation to make it available for wider purposes."

One Nolan and Drysdale have been loaned to major exhibitions and retrospectives at art galleries and most of the collection emerged for a public showing in 1992.

The collection is "not a balance sheet item" though, of course, full inventories are kept and there are no plans to sell. But, as with the Coles Myer and other corporate collections, it has undoubtedly gained in value, with works bought as long as 50 years ago for as little as $100 that are likely to be now worth hundreds of thousands of dollars.

In a sense, that means the collection has added shareholder value, though, of course, the RBA has far more onerous responsibilities on its hands, including supervision of the nation's financial affairs, its currency and its monetary policy.

In any case, the RBA has only one shareholder to worry about, the Federal Government. "To us, it [the art collection] is peripheral," Emanuel says. "We always said it was part of the national treasure."